Justia Insurance Law Opinion Summaries

Hurricane Ida struck Louisiana on August 29, 2021, causing damage to property insured by Capitol Preferred Insurance Company, which had merged with Southern Fidelity Insurance Company (SFIC). The named insured was Emma Bryan, and the plaintiffs—Cynthia Bryan, Aubry Bryan, Jr., Aunya Bryan, and Glenda Bryan—sought policy proceeds. The insurance policy required that any action be brought within two years of the date of loss. SFIC made an unconditional payment to the plaintiffs on March 1, 2022. On June 15, 2022, SFIC was placed into receivership and declared insolvent. Plaintiffs initially sued Louisiana Citizens Property Insurance Corporation (LCPIC) but amended their petition on October 24, 2023, to substitute the Louisiana Insurance Guaranty Association (LIGA) as the defendant.The trial court denied LIGA’s peremptory exception of prescription. LIGA then sought supervisory review from the Louisiana Court of Appeal, Fourth Circuit. The appellate court held, in a four-to-one decision, that the two-year limitation for suit against LIGA began on the date of SFIC’s insolvency, not the date of loss, and denied LIGA relief. One judge dissented, maintaining that prescription should run from the date of loss.The Supreme Court of Louisiana reviewed the matter. It held that LIGA is entitled to the benefit of the policy’s two-year prescriptive period, but this period is subject to interruption by an unconditional payment. The Court found that SFIC’s unconditional payment on March 1, 2022, interrupted prescription, and the plaintiffs’ amended petition was timely. The Court clarified that only unconditional payments—those made without qualifications or reservation of rights—interrupt prescription. The Supreme Court of Louisiana affirmed the denial of LIGA’s exception of prescription and remanded the case for further proceedings in the trial court. View "BRYAN VS. LOUISIANA CITIZENS PROPERTY INSURANCE CORPORATION" on Justia Law

A family visiting Arkansas stopped at the Lydalisk Bridge, a low-water crossing over the Middle Fork of the Little Red River. The bridge, owned by The Nature Conservancy, created a pool upstream where water flowed through narrow culverts beneath the bridge. There were no warning signs posted. A seven-year-old child swam in the pool and was pulled by the river’s current into a culvert, becoming trapped and subsequently dying. The Nature Conservancy had commissioned engineering reports about this and a similar nearby bridge, but received the report warning of risks at the Lydalisk Bridge only after the incident.The United States District Court for the Eastern District of Arkansas reviewed the parents’ negligence and malicious failure-to-warn claims against The Nature Conservancy and its insurers. The district court granted the defendants’ motions to dismiss. The court found that the Arkansas Recreational Use Statute (ARUS) generally relieves landowners from a duty of care to recreational users, unless there is a malicious failure to warn of an ultra-hazardous condition actually known to the owner. The court held that the complaint’s allegations did not plausibly show malice, only recklessness. The court also found that the Arkansas Direct-Action Statute (DAS) did not allow direct suit against the insurers, because The Nature Conservancy was not immune from suit—only from liability.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed. The Eighth Circuit held that, under ARUS, Allen’s allegations did not satisfy the requirement for malicious conduct, and thus he failed to state a claim for breach of duty. The court further held that ARUS provides immunity from liability but not from suit, making DAS inapplicable to the insurers. The dismissal by the district court was affirmed. View "Allen v. Nature Conservancy" on Justia Law

A resident of Puerto Rico suffered work-related injuries in 1994, resulting in permanent total disability. His employer and its insurance carrier were ordered to provide medical care under Section 7 of the Longshore and Harbor Workers’ Compensation Act, as extended by the Defense Base Act. In 2019, a Puerto Rico-licensed physician recommended medical cannabis-infused edibles to treat the petitioner’s chronic pain. The petitioner sought reimbursement for these products from the employer’s insurance carrier, which denied the request.The petitioner then asked the United States Department of Labor’s Office of Administrative Law Judges to order reimbursement, arguing that medical cannabis was a reasonable and necessary treatment. The Administrative Law Judge denied the request, finding that marijuana’s classification as a Schedule I substance under the Controlled Substances Act (CSA) meant it could not have an accepted medical use under federal law. On appeal, the Department of Labor Benefits Review Board affirmed this decision by a 2-1 vote, agreeing that reimbursement was barred by the CSA and rejecting arguments that recent federal appropriations riders or executive actions altered the federal legal status of marijuana.On further appeal, the United States Court of Appeals for the Second Circuit reviewed the case. The court held that because marijuana remains a Schedule I substance under the CSA, it cannot be considered a reasonable and necessary medical expense for purposes of reimbursement under the Longshore and Harbor Workers’ Compensation Act. The court found that neither appropriations riders nor recent executive or legislative actions had changed marijuana’s federal classification or its legal status under the Act. Therefore, the court denied the petition for review. View "Garcia v. Department of Labor" on Justia Law

This case arises from multi-district litigation involving claims that certain aqueous film-forming foam products caused injuries, and that Illinois Union Insurance Company issued excess liability policies to BASF Corporation, which allegedly designed and sold components of those products. Plaintiffs, who originally filed their cases in Wisconsin state court, assert that Illinois Union is directly liable under Wisconsin law for BASF’s conduct. After removal to federal court, the cases were consolidated for pretrial proceedings in the United States District Court for the District of South Carolina under the multi-district litigation statute.The District Court for the District of South Carolina, managing the consolidated proceedings, had entered case management orders requiring motions either to be signed by lead counsel or, if not, to be preceded by a motion for leave of court. Illinois Union sought leave to file a motion to stay the proceedings against it pending arbitration, contending that its insurance policies required arbitration of the dispute. The district court denied Illinois Union’s motion for leave, first citing a failure to consult with lead counsel as required, but then acknowledging that consultation had ultimately occurred. The decisive reason for denial was that lead counsel did not consent to Illinois Union’s motion, and the district court ruled that, absent such consent, the motion could not be filed.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s order. It held that, while district courts have broad discretion to manage multi-district litigation, they may not exercise this authority in a way that prevents a party from asserting its statutory right under the Federal Arbitration Act to seek a stay of litigation pending arbitration. Because the district court’s order effectively barred Illinois Union from filing its stay motion based on lack of lead counsel’s consent, the Fourth Circuit vacated the district court’s order and remanded for further proceedings. View "Bouvet v. Illinois Union Insurance Company" on Justia Law

A fire severely damaged a church building in southeastern Indiana. The church promptly notified its insurer, which had issued a policy covering actual cash value (subject to depreciation) and additional replacement-cost benefits if the property was repaired or replaced “as soon as reasonably possible.” The parties disputed the cost of rebuilding, but the insurer paid the church nearly $1.7 million—the undisputed actual cash value and additional agreed amounts—while the church continued to contest the estimates and did not begin repairs or replacement. About two years after the fire, the church sued the insurer for breach of contract and bad faith denial of replacement-cost benefits.The insurer removed the case to the United States District Court for the Southern District of Indiana and moved for summary judgment, arguing that the church had not complied with the policy’s requirement to repair or replace the property promptly. The church, represented by counsel, responded with arguments about factual disputes over estimates and the credibility of insurance adjusters, but did not address the legal basis concerning the contractual precondition for replacement-cost benefits. The district court granted summary judgment to the insurer, finding the church had failed to engage with the insurer’s core argument.On appeal, with new counsel, the church raised for the first time that ongoing disputes over replacement-cost estimates excused its failure to begin repairs, citing two Indiana Court of Appeals cases. The United States Court of Appeals for the Seventh Circuit held that this argument was waived because it was not presented to the district court. The Seventh Circuit further held that plain-error review in civil cases is available only in extraordinary circumstances not present here. The court affirmed the district court’s judgment in favor of the insurer. View "Crothersville Lighthouse Tabernacle Church v. Church Mutual Insurance Company" on Justia Law

An apartment complex owned by Kinsman Investments suffered roof and siding damage during Hurricane Katrina in 2005. The complex was insured by Alfa Mutual Insurance Company, and Alfa's adjuster, Jeffery Dimoff, worked with Kinsman’s owner to arrange repairs. Kinsman later alleged that Alfa and Dimoff convinced it to use less expensive materials, misrepresenting that higher-quality materials were unavailable or unsafe, and failed to disclose a policy provision allowing compensation for differences in material quality. Kinsman claimed it was unaware of this provision and relied on Dimoff’s interpretation of the policy. In 2022, Kinsman sued Alfa and Dimoff for fraud, fraudulent suppression, and bad faith/breach of contract, seeking damages for the alleged diminished value of the property.The Mobile Circuit Court reviewed the case. Alfa and Dimoff moved for summary judgment, arguing all claims were barred by statutes of limitations, since Kinsman knew of the material differences and had a copy of the policy in 2005 and 2006, but waited until 2022 to file suit. The trial court denied the motions for summary judgment. Alfa and Dimoff sought permission to appeal, which was denied, and then filed a petition for a writ of mandamus.The Supreme Court of Alabama reviewed the petition. It held that Alfa and Dimoff had a clear legal right to summary judgment because the complaint showed the claims accrued in 2006, making the 2022 lawsuit untimely under applicable statutes of limitations. The Court also found that no adequate alternative remedy existed, as further litigation would impose undue burdens. The Court issued the writ of mandamus, directing the trial court to vacate its denial of summary judgment and to enter summary judgment in favor of Alfa and Dimoff. View "Ex parte Alfa Mutual Insurance Company" on Justia Law

Two individuals were involved in a car accident in 2020 and received a payment from the other driver’s insurer. Seeking further compensation, they pursued a claim against their own underinsured motorist policy with their insurance company. After the insurer offered less than the policy limit, the insureds initiated a breach of contract lawsuit. Ultimately, the insurer settled by paying the full policy limit, and that litigation was dismissed. Subsequently, the insureds filed a second lawsuit alleging that the insurer acted in bad faith by delaying settlement, leading to emotional and financial distress.During discovery in the bad-faith action, the insureds requested the insurer’s claims file, including documents generated after the prior litigation began. The insurer withheld certain documents, citing attorney-client privilege and the work-product doctrine, and provided a privilege log. The Hamilton County Court of Common Pleas ordered production of the entire unredacted claims file up to the date of payment, without conducting an in camera review. The insurer appealed, arguing that the trial court erred by not applying statutory requirements for privilege and failing to conduct an in camera inspection.The First District Court of Appeals affirmed the trial court’s order, relying on Boone v. Vanliner Insurance Co., holding that in bad-faith claims, materials created prior to denial of coverage are discoverable. The appellate court reasoned that the insureds’ allegations of bad faith were sufficient to override privilege protections and rejected the insurer’s arguments about statutory requirements and the need for an in camera review, concluding that the insurer had not asserted privilege with sufficient detail.The Supreme Court of Ohio reversed the appellate court’s judgment. It held that the Boone decision had been superseded by statute: attorney-client communications are subject to discovery only after a prima facie showing of bad faith and an in camera review under R.C. 2317.02(A)(2). The work-product doctrine is governed by Civil Rule 26(B)(4) and allows disclosure only upon a showing of good cause. The case was remanded to the trial court for compliance with these standards. View "Eddy v. Farmers Property Cas. Ins. Co." on Justia Law

A group of insurance companies sued various medical providers and related individuals in federal court, alleging that the providers engaged in a fraudulent scheme in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). Specifically, the insurance companies claimed that the defendants submitted fraudulent reports and billing documents for patients involved in car accidents, seeking payments under insurance policies. The allegations included overbilling, billing for services not rendered, and unnecessary procedures.After the insurance companies filed their initial complaint in the United States District Court for the Southern District of Texas, the parties held several conferences to address potential deficiencies. Defendants argued that the complaint failed to adequately allege the existence of a RICO “enterprise,” particularly a consensual decision-making structure among the alleged participants. The insurance companies amended their complaint, but the defendants again moved to dismiss, challenging the sufficiency of the RICO allegations. The magistrate judge recommended granting dismissal due to the complaint’s failure to plead an adequate enterprise. The district court agreed, granting dismissal but allowing the plaintiffs to file a post-judgment motion to amend.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed whether the district court erred in denying leave to further amend the complaint after judgment. The appellate court held that even though the district court referenced the Rule 59(e) standard rather than the more liberal Rule 15(a) standard for amendment, it was appropriate to affirm if there were “ample and obvious” reasons for denial, such as undue delay. The Fifth Circuit found that the insurance companies had delayed seeking amendment and stood by their pleading’s sufficiency despite repeated notice of its deficiencies, and thus, the district court did not abuse its discretion in denying leave to amend. The judgment was affirmed. View "Farmers Texas County Mutual Insurance Co. v. 1st Choice" on Justia Law

A tornado struck Tennessee, damaging two properties owned by a church that held property insurance with an insurer. The church filed a claim, and the insurer made a payment, but the church alleged that the insurer improperly calculated the amount by subtracting depreciation for non-material costs (such as labor) from the "actual cash value" (ACV) payment, leading to a lower payout. The insurance policy did not specify whether labor should be depreciated. The church then brought a putative class action, asserting similar claims under the laws of ten states, seeking class certification for policyholders who received reduced ACV payments because of the insurer’s practice.The United States District Court for the Middle District of Tennessee addressed several motions. It rejected the insurer’s argument that the church lacked Article III standing to assert claims under other states' laws, and denied the insurer’s motion for judgment on the pleadings as to Texas law. When considering class certification, the district court found the plaintiff satisfied Rule 23(a)’s requirements but limited class certification to four states (Arizona, California, Illinois, and Tennessee), citing unsettled law in the remaining six states. The court reasoned that the uncertain nature of laws in Kentucky, Ohio, Missouri, Mississippi, Texas, and Vermont would make a ten-state class action unwieldy, and thus declined to certify a class for those states.On appeal, the United States Court of Appeals for the Sixth Circuit reviewed the district court’s decisions. It held that the plaintiff had Article III standing to represent the class because the alleged injuries were substantially similar across the proposed class members. The appellate court found that the district court abused its discretion by not conducting an Erie analysis for five of the six excluded states and vacated the class-certification order in part, remanding for further proceedings. However, it affirmed the denial of class certification for Vermont due to insufficient authority on Vermont law. View "Generation Changers Church v. Church Mutual Ins. Co." on Justia Law

Mr. Scobee suffered significant injuries in a motorcycle accident involving Mr. Norris, who was insured by USAA. The Scobees, after obtaining a $7 million jury verdict against the Norrises in Missouri state court, claimed that USAA violated Kentucky’s Unfair Settlement Practices Act (KUCSPA) and committed common-law bad faith by failing to promptly settle their claim and by not paying the policy limit. The Scobees had initially made a settlement demand to USAA, which USAA declined, requesting more information. The Scobees did not respond, instead proceeding with litigation, which ultimately resulted in the jury verdict. After judgment, USAA offered to pay its $100,000 policy limit but the Scobees did not respond to this offer. USAA subsequently deposited the policy limit plus interest into the court registry during separate declaratory judgment proceedings.The case began in Kentucky state court but was removed to the United States District Court for the Eastern District of Missouri. That court dismissed the common-law bad faith claim, granted summary judgment for USAA on the KUCSPA claim, limited the Scobees’ expert testimony, and denied the Scobees’ motions for summary judgment and to exclude USAA’s expert testimony.The United States Court of Appeals for the Eighth Circuit reviewed the case. It held that the district court did not abuse its discretion in limiting the Scobees’ expert’s testimony, especially regarding legal conclusions and interpretations of Kentucky law. The appellate court also affirmed summary judgment for USAA, concluding there was no genuine dispute of material fact and that USAA’s conduct did not rise to the level of bad faith or “outrageous” conduct required under KUCSPA. The court further ruled that USAA was not obligated to pay until liability was established by the jury and found no improper motive in USAA’s handling or timing of payment. The judgment of the district court was affirmed in all respects. View "Scobee v. USAA Casualty Insurance Company" on Justia Law